What is the minimum amount the Minimum Royalty will be for a Bor Restoration franchise?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
we will have the right to establish, in writing, reasonable new standards, costs, and fees for the implementation of new technology in the System, and you agree to comply with those reasonable new standards.
3.3 Royalty
- a. You will pay the greater of the Minimum Royalty or the Percentage Royalty monthly (Royalty), which is collected in the manner more fully stated below.
- b. The Minimum Royalty will never be less than $500.
- i. It may be increased no more often than once every 36 months during the Initial Term to reflect an increase in the "Consumer Price Index" for all urban consumers, all items seasonally adjusted (base 1982-1984) (CPI-U) that is quoted by the U.S. Bureau of Labor Statistics, or its successor.
- ii. To determine if there is an increase in the CPI-U, we will first determine the baseline CPI-U (Base CPI-U) as of the Effective Date. If the Effective Date is other than the first day of a month, then the Base CPI-U will be determined on the first day of the first month following the Effective Date. Then, on the 36th-month anniversary of the Effective Date and again on the seventy-second month anniversary (or the first day of the month following the 36th or 72d-month anniversary if that date is other than the first day of a month), we will determine the then-current CPI-U. (Current CPI-U). We will calculate the increase (if any) in the Minimum Royalty by multiplying the then-current Minimum Royalty by a fraction, the denominator of which is the Base CPI-U and the numerator of which is the Current CPI-U.
- c
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, franchisees must pay a monthly royalty fee, which is the greater of a Minimum Royalty or a Percentage Royalty. The Minimum Royalty will never be less than $500. This means that even if the Percentage Royalty calculation is less than $500, the franchisee is still obligated to pay a minimum of $500 each month.
Bor Restoration may increase the Minimum Royalty no more than once every 36 months during the Initial Term. Any increase will reflect changes in the Consumer Price Index (CPI-U) as reported by the U.S. Bureau of Labor Statistics. The increase is calculated by multiplying the current Minimum Royalty by a fraction, where the denominator is the Base CPI-U (as of the Effective Date) and the numerator is the Current CPI-U (on the 36th-month anniversary).
It's important to note that the Minimum Royalty and Percentage Royalty may also increase to the then-current amounts if a franchisee is awarded Successor Franchise Rights. Bor Restoration will begin collecting Royalties and other fees 45 days after the franchisee's Opening Date. Therefore, prospective franchisees should factor in this minimum royalty payment into their financial projections, understanding that it could increase over time based on the CPI-U or upon renewal of the franchise agreement.